Cryptococcus neoformans is a neurotropic pathogen that,unless treated,causes fatal meningoencephalitis primarily in individuals with T-cell deficiency such as the AIDS patients. However, the fungus also causes infection in otherwise normal patients at a low frequency. C. neoformans is an obligate aerobe which is commonly found in the human environment world-wide. The fungus requires atmospheric concentrations of oxygen for optimum growth in vitro and the growth is drastically retarded at oxygen levels lower than that of the atmosphere. In the past three years, we have constructed an insertional mutant library composed of 30,000 mutant clones and screened them for their ability to grow under hypoxic conditions in 1% oxygen and 5% carbon dioxide. We identified numerous clones that were unable to grow under hypoxic conditions. These mutants belonged to two categories, those that had mutations in genes that function in SREBP (sterol regulatory element binding protein termed as Sre1) pathway and the others that belonged to cyptcococcus specific-gene mutations which are not known to be associated with the oxygen sensing system. The genes identified in these two categories were deleted in the serotype D reference strain, B-3501. Deletants expressing the expected phenotype (unable to grow under low oxygen) were complemented with their respective wild type genes. During 2008-2009, we charcterized mutants with genetic defects in 6 genes that share homology to genes that function in the mammalian SREBP pathway. Three of these genes, SFB2, KAP123, and GSK3, are not reported to be involved in the SREBP pathway of other fungi. In addition, C. neoformans contains an extra gene, DAM1, which functions in the SREBP pathway but has not been described previously in other organisms. Mutants associated with the steps prior to formation of the nuclear SREBP form dramatically reduced the accumulation of the nuclear form. Concurrently, two of these mutants, scp1 and stp1, and the previously isolated sre1 mutants showed a reduction in ergosterol levels, hypersensitivity to several chemical agents including azole antifungals, CoCl2, compounds producing reactive oxygen species or reactive nitrogen species and most importantly, showed reduced virulence in mice. Mutations in genes involved in the later steps of the Sre1 pathway, such as those required for the import and phosphorylation of proteins in nucleus, showed less compelling phenotypes. These findings suggest that the SREBP pathway is highly conserved in C. neoformans and it serves as an important link between sterol biosynthesis, oxygen sensing, CoCl2 sensitivity and virulence in C. neoformans.During 2008-2009, we also characterized the levels of azole heteroresistance in C. neoformans strains that had been isolated prior to the advent of azole antifungals as well as those isolated from AIDS patients undergoing azole maintenance therapy and found that heteroresistance to fluconazole is universal in C. neoformans. During 2009-2010, we focused on the mechanism of heteroresistance in C. neoformans as well as the status of intrinsic heteroresistance to fluconazole in C. gattii, the sister species of C. neoformans that causes cryptococcosis. We found that C. neoformans strains possess an innate ability to produce subpopulations that can form disomic chromosomes when the cells are stressed by high concentration of fluconazole and the number of these disomic chromosomes was proportional to the concentration of the drug. For example, at 32 ug/ml fluconazole, the surviving clones were disomic for chromosome 1 while those that survived at 64 ug/ml fluconazole contained disomies of chromosomes one and four. Chromosome one was observed to be disomic in every clone that survived drug concentrations higher than the strains minimal inhibitory concentration of the drug. Chromosome one was found to contain ERG11, the target gene of azoles, and AFR1, an efflux pump known for azoles. These results suggest that complete duplication of chromosome 1 is a major mechanism by which C. neoformans overcomes the stress of azole drugs. C. gattii was found to be innately heteroresistant to fluconazole as is the case with C. neoformans but with higher levels of heteroresistance to fluconazole.